| Actual | Previous | |
|---|---|---|
| Month over Month | 0.6% | -0.1% |
| Year over Year | 3.5% | 1.7% |
Highlights
The September M4 data show a significant increase, with a month-over-month rise of 0.6 percent following August's unrevised 0.1 percent decline. Annual growth climbed from 1.7 percent to 3.5 percent. These figures tentatively suggest an accelerating flow of liquidity within the economy, potentially pointing to increased lending and investment activities, which could stimulate consumer spending and inflation.
Excluding intermediate other financial corporations, M4 was up a stronger 0.9 percent but this failed to offset August's 1.2 percent drop. Even so, at an annualised 2.1 percent rate, growth over the last three months was the highest since February. Moreover, similarly-adjusted lending grew fully 5.0 percent.
Today's report will not have much impact on next week's BoE MPC meeting which is widely expected to see another cut in Bank Rate.
Excluding intermediate other financial corporations, M4 was up a stronger 0.9 percent but this failed to offset August's 1.2 percent drop. Even so, at an annualised 2.1 percent rate, growth over the last three months was the highest since February. Moreover, similarly-adjusted lending grew fully 5.0 percent.
Today's report will not have much impact on next week's BoE MPC meeting which is widely expected to see another cut in Bank Rate.
Definition
M4 is the Bank of England's main broad measure of money supply. There is no target for M4 and in practice the central bank tends to follow an adjusted measure that excludes intermediate other financial corporations in order to get a handle on current underlying trends. The M4 private sector lending counterpart is the most closely watched aspect of the report.
Description
M4 is similar to the M3 measure used in some other countries. M4 includes everything in M2 (also called the retail component of M4) plus other deposits with an original maturity of up to five years; other claims on financial institutions such as repos and bank acceptances; debt instruments issued by financial institutions including commercial paper and bonds with a maturity of up to five years. Understanding the role of money in the economy has always been an important issue for policymakers. And the pickup in broad money growth and decline in credit spreads over the past three years together with more recent financial market turbulence has made it a particularly pertinent issue. Monetary data can potentially provide important corroborative or incremental information about the outlook for inflation. Quantitative easing is essentially a policy aimed at boosting money supply.
